Section 292-100External Link contains some rules designed to ensure that certain contributions are still excluded from non-concessional contributions even though they may not qualify for the CGT 15 year exemptions.
The requirement for a person to hold the asset for 15 years is waived if the person was permanently incapacitated at the time of the CGT event as long as they were not already permanently incapacitated at the time the asset was acquired.
Pre-CGT assets are to be treated as post-CGT assets in determining whether the requirements have been satisfied. Contributions are also included if they relate to capital proceeds from a CGT event that would have qualified for the 15 year exemption apart from the fact there was no capital gain.
Small business retirement exemption
Under section 152-305External Link a person may choose to disregard all or part of a capital gain if all the following apply:
- The basic conditions in Subdivision 152-AExternal Link are satisfied for the gain.
- They are under 55 years old just before they make the choice and they contribute an amount equal to the asset's CGT exempt amount to a complying super fund or retirement savings account (RSA).
- The contribution is made
- if the relevant CGT event is CGT event J2, J5 or J6 as defined in section 104-5External Link when they made the choice
- otherwise, at the later of when the choice is made and the proceeds were received.
A choice exercised under the small business retirement exemption must not exceed the CGT retirement exemption limit. A person has a lifetime CGT retirement exemption limit of $500,000 in accordance with section 152-320External Link.
It is important to note that the ability to elect to exclude the amount from non-concessional contributions under the small business retirement exemption only applies to the capital gain whereas the 15 year exemption can apply to the whole of the capital proceeds from the disposal and not just the gain under section 292-100External Link.
Companies and trusts may also choose to use the small business retirement exemption as long as they satisfy rules about the amount and timing of the payment for at least one of their CGT concession stakeholders.
The small business retirement exemption is the maximum amount that can be excluded from a person's income tax.
The CGT cap is the maximum amount of eligible contributions that a person can choose to have excluded from their non-concessional contributions.
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